- The median dividend yield of these 7 electric utilities is 4.5%.
- These 7 electric utilities have a median price-to-book value of 1.1.
- The median percent above 52-week low of these 7 electric utilities is only 9%.
I knew I needed to expand my universe of potential companies if I was going to find an electric utility worth purchasing after being unimpressed with the investment opportunity I wrote about in Now Is The Time to Consider Consolidated Edison. I took to Bloomberg and identified all of the electric utilities currently trading on a stock exchange in the United States, 183 in total.
This article identifies the 7 electric utilities which appeared most often among best fifteen companies when looking individually at:
- price to sales;
- price to EBITDA;
- dividend yield;
- price to book;
- price to earnings; and
- percent above 52-week low.
All metric and trading data was obtained from Yahoo! Finance. The original group of 183 electric utilities included some dodgy constituents indeed. These questionable companies were removed if they had trading volume below 10,000 shares and no price to earnings or price to book. This condensed the original list of 183 down to the 70 companies in Table 1 below.
These 70 electric utilities were compared against each other using the six metrics listed above. For each metric the companies were sorted by their respective metric value from least to greatest, except for dividend yield which was sorted from greatest to least. Each company was assigned an initial point value of zero. A point was then assigned to each of the top fifteen companies for each metric and a point was subtracted from each company in the bottom fifteen for each metric. This means a maximum of 6 points and a minimum of -6 points was possible. The distribution of cumulative points for all six metrics can be seen below in Chart 1 and a complete list of the 70 companies analyzed is available in Table 1.
Chart 1. Cumulative Point Distribution
Table 1. The 70 Electric Companies Analyzed
American Electric Power Co., Inc.
AGL Energy Limited
Black Hills Corporation
CMS Energy Corp.
CPFL Energia S.A.
Dominion Resources, Inc.
DTE Energy Company
Duke Energy Corporation
Electricite de France SA
Consolidated Edison, Inc.
The Empire District Electric Company
Empresa Distribuidora y Comercializadora Norte S.A.
El Paso Electric Co.
Companhia Paranaense de Energia
Empresa Nacional de Electricidad S.A.
Great Plains Energy Incorporated
Hawaiian Electric Industries Inc.
Huaneng Power International, Inc.
U.S. Geothermal Inc.
ITC Holdings Corp.
Korea Electric Power Corp.
Alliant Energy Corporation
MDU Resources Group Inc.
MGE Energy Inc.
NextEra Energy, Inc.
NRG Yield, Inc.
OGE Energy Corp.
Ormat Technologies Inc.
Otter Tail Corporation
Pampa Energia SA
Public Service Enterprise Group Inc.
PNM Resources, Inc.
Pinnacle West Capital Corporation
Pepco Holdings, Inc.
Portland General Electric Company
Open Joint-Stock Company RusHydro
TECO Energy, Inc.
Integrys Energy Group, Inc.
TERNA - Rete Elettrica Nazionale Societ
UIL Holdings Corporation
UNS Energy Corporation
Wisconsin Energy Corp.
Westar Energy, Inc.
Xcel Energy Inc.
METRIC 1. PRICE TO SALES
Price to sales values were sorted from least to greatest. The median price to sales value of all 70 electric utilities was approximately 1.4, while the median price to sales value of the top fifteen was approximately 0.7. This means the companies in Table 2 are approximately half as cheap by price to sales than the average electric utility.
Table 2. Top Fifteen Ranked By Price To Sales
Price to sales
METRIC 2. PRICE TO EBITDA
Price to EBITDA values were sorted from least to greatest. The median price-to-sales value of all 70 electric utilities was approximately 5.2, while the median price-to-EBITDA value of the top fifteen was approximately 3.4. This means the average electric utility is approximately 1.5 times more expensive by price to EBITDA than the companies in Table 3.
Table 3. Top Fifteen Ranked By Price To EBITDA
Price to EBITDA
METRIC 3. DIVIDEND YIELD
Dividend yield values were sorted from greatest to least. The median dividend yield value of all 70 electric utilities was approximately 3.3%, while the median dividend yield value of the top fifteen was approximately 4.5%. This means the companies in Table 4 yield approximately 1.4 times more that of the average electric utility.
Table 4. Top Fifteen Ranked By Dividend Yield
Dividend Yield (%)
METRIC 4. PRICE TO BOOK
Price to book values were sorted from least to greatest. The median price-to-book value of all 70 electric utilities was approximately 1.6, while the median price-to-book value of the top fifteen was approximately 1.1. This means the companies in Table 5 are approximately 31% cheaper by price to book than the average electric utility.
Table 5. Top Fifteen Ranked By Price To Book
Price to book
METRIC 5. PRICE TO EARNINGS
Price to earnings values were sorted from least to greatest. The median price-to-earnings value of all 70 electric utilities was approximately 18, while the median price-to-earnings value of the top fifteen was approximately 12.9. This means the average electric utility is approximately 1.4 times more expensive by price to earnings than the companies in Table 6.
Table 6. Top Fifteen Ranked By Price To Earnings
Price to earnings
METRIC 6. PERCENT ABOVE 52-WEEK LOW
Percent above 52-week low values were sorted from least to greatest. The median percent above 52-week low value of all 70 electric utilities was approximately 23.2%, while the median percent above 52-week low value of the top fifteen was approximately 9%. Additionally, ED, HE, PIKE, UIL, PNW and ALE each currently trade below the midpoint between their respective 52-week high and low.
Table 7. Top Fifteen By Percent Above 52-Week Low
Percent above 52-week low (%)
Only 27 of the 70 electric utilities managed to survive this analysis with at least one total cumulative point. The distribution of cumulative points for all six metrics can be seen in Chart 1 above and Table 8 below.
Table 8. Cumulative Point Distribution
The 7 electric utilities that cumulatively outranked the other 63 are as follows:
- Hawaiian Electric Industries Inc. ; and
- Integrys Energy Group, Inc.
- Entergy Corporation;
- Consolidated Edison, Inc.;
- FirstEnergy Corp.;
- The Empire District Electric Company; and
- Huaneng Power International, Inc.
Comment below if you think solar will make electric utilities obsolete or there is a better potential electric utility investment than one of the final seven.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.